Jimi Wanjigi Unveils Plan to Replace 16% VAT with 5% Sales Tax

Nairobi, Kenya — September 27, 2025 (EAT).

Safina Party leader Jimi Wanjigi has proposed scrapping Kenya’s existing 16% Value Added Tax (VAT) in favour of a 5% sales tax, a radical shift aimed at reducing the tax burden, simplifying compliance, and stimulating economic growth.

The Latest

• In an announcement on X, Wanjigi described the VAT system as “inequitable and burdensome,” arguing that a lower, flat sales tax rate would boost consumption and ease pressure on both businesses and consumers.

• He dubbed the proposed shift part of his broader “Debt Rebellion” agenda, which calls for bold fiscal reforms to reclaim Kenya’s economic sovereignty.

• According to Wanjigi: “Every shilling spent on debt repayment robs Kenya’s future. We must simplify taxes to unleash growth.”

What He Proposes

• Replace VAT with 5% sales tax: All goods and services currently subject to VAT would instead be taxed via a flat rate at point of sale.

• Broaden base, narrow exemptions: Wanjigi suggests minimizing exemptions and loopholes to preserve government revenues while ensuring fairness.

• Simplify compliance: He envisions a leaner tax machinery that reduces administrative costs and corruption associated with complex VAT filings.

• Fiscal recalibration: The proposal would need to be backed by growth-triggered revenue, spending cuts, or alternative sources to avoid budget shortfalls.

Context & Challenges

• Current VAT system: VAT is Kenya’s key indirect tax, accounting for a large share of revenue but criticized for cascading effects and burden on low-income consumers.

• Global precedent: Some countries have experimented with hybrid or low flat taxes (e.g., Hong Kong’s low corporate rates), though wholesale replacement of VAT is rare.

• Revenue risk: A drop from 16% to 5% would drastically cut yields unless offset by volume, compliance gains, or new taxes.

• Implementation hurdles: Legal amendments, stakeholder buy-in, transitional arrangements, and enforcement capacity are significant challenges.

Reactions & Responses

• Economists: Some caution that such a steep rate cut may create large fiscal gaps and debt pressure unless growth surges.

• Business sector: Retailers and MSME operators may welcome simplified taxes, but supply chains may resist rate shifts.

• Government / Treasury: The Finance Ministry has not publicly responded; analysts expect close scrutiny over feasibility and impact.

• Political competitors: The proposal adds contrast to existing party platforms and may force debate on tax reform.

What We Don’t Know Yet

• Whether Wanjigi has performed detailed revenue simulations to assess fiscal viability.

• How exemptions—for essentials, agriculture, health, education—would be treated under the sales tax model.

• How quickly and smoothly a legal and institutional transition could be achieved.

• What complementary reforms (spending, debt, subsidies) would accompany such a tax overhaul.